• The lawsuit between Ripple and SEC is the showstopper from December 2020 when it was filed.
• The case is conducted in the Federal Court of New York, Manhattan.
• This legal battle will have an upper hand in setting up the history of the crypto market.
When Did It All Begin?
Ripple company started selling its native token XRP in 2013. In 2021, SEC accused Ripple Labs, Christian Larsen, Ripple co-founder and Bradley Garlinghouse, Ripple CEO of privately selling XRP illegally without any prior or fair notice and sought to ban them from further selling tokens in the crypto world.
Security or a Commodity?
SEC believes that an asset is categorized to be a security if it fulfills all the four criteria of Howey’s test- obtaining by investing money, available on a common enterprise or platform, render reasonable profit and influence by third party effort. However, Ripple Lab argued that XRP is not a security asset and hence doesn’t need to be registered under the SEC as they are ready to prove XRP as a fully decentralized commodity.
Ripple Lab responded to SEC’s allegations by acknowledging XRP as digital currency and requested them to cancel the lawsuit against them. They claim that XRP doesn’t fall under any person or corporation’s shadow and demanded for no registration under SEC regulations.
The verdict on this case awaits with curiosity as it has been over 6 months since then without reaching any resolution yet. The winner of this court battle will determine how future transactions involving cryptocurrency would be regulated in terms of securities law .